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Don’t rush transmission overhaul for power grid, energy companies warn

The Australian Energy Market Commission’s radical reforms to shake up transmission systems for the electricity grid should not be rushed, big energy companies and renewable operators have warned, saying these could clash with other changes.

Although there is consensus on the need to shake up the National Electricity Market, which was built around traditional coal-fired power stations in central locations, there are growing fears the technically complex rules may not be ready to implement for the proposed 2022 start date.

Australian Energy Council chief executive Sarah McNamara said the challenges of efficiently co-ordinating generation and transmission investment were substantial.

“While we understand AEMC’s desire to move this forward, we don’t know yet if its access proposal is consistent with major market design reforms the Energy Security Board is working on,” Ms McNamara said.

“Ideally this work should merge with the ESB’s post-2025 work.

“At a practical level, the access proposal in this latest discussion paper is technically very complex to implement and the July 2022 start date coincides with other major IT projects that will need to be implemented by market participants, including the demand response mechanism and five-minute settlement.”

The AEMC, which creates the electricity rules for the NEM, has proposed a region-based model for providing transmission to the grid. The financial transmission rights would reward big power producers if they connect into less congested parts of the grid.

The council also has proposed renewable energy zones in which generators use a shared transmission network. They would contribute financially to investment in the shared transmission network for the renewable energy zone.

In return, generators would receive a long-term hedge that gives some guarantee about its financial return for making that investment.

The changes in how the grid operates have been driven by the rapid increase in solar and wind projects into the NEM, mostly in regional areas. The connection of these projects into the grid has been a headache for energy planners for years.

Clean Energy Council chief executive Kane Thornton said there was little doubt there was a need to modernise Australia’s transmission network.

“Executives in the clean energy industry have rated both transmission access and grid connection as their highest priority over the last 12 months, highlighting the urgent need to address the issue,” he said.

“However, the reforms proposed by the AEMC are extremely complex and should not be rushed. It will take time to fully assess and implement the reforms.”

Transmission issues

Federal Energy Minister Angus Taylor said transmission issues had been largely ignored in policy discussions and would be a focus of the next Council of Australian Governments energy council meeting in December.

“It is clear that changes are required in how transmission is delivered in the NEM,” he said.

The concerns come as Northern Territory Energy Minister Dale Wakefield commissioned an independent review into the system blackout in Alice Springs on Sunday.

Power was cut to the city of 30,000 people for more than eight hours.

“An investigation into the cause of the network outage is under way. I have made it clear to the chief executives of Territory Generation and Power and Water Corporation that this is unacceptable,” Mr Dale said.

The Electrical Trades Union said it had warned Territory Generation for months about problems, saying the Ron Goodin power station, which had been closed prematurely, should be on standby as a back-up.

An APPEA report to be released on Tuesday will show the natural gas industry contributed $55 billion to the Queensland economy over the past seven years.

Source: Financial Review